Buying Your First Car? 5 Costs Dealers May Not Tell You Upfront

For a first-time car buyer, the number displayed at the dealership is rarely the final amount that leaves the bank account. The jump from ex-showroom price to on-road price can be significant once registration, road tax, insurance, accessories and other charges are added.

For someone buying their first car, there are also costs that can be easy to overlook during the excitement of booking the vehicle. According to Abhishek Bansal, CEO, Insurance Business at InsuranceDekho, here are five expenses buyers should check before signing the deal.

1. Insurance Is More Than Just Another Line Item

Insurance is often treated as a mandatory expense that has to be paid before the car can leave the showroom. But buyers should first understand what they are actually paying for. Third-party motor insurance is mandatory. It covers the policyholder's legal liability towards third parties. However, it does not cover damage to the buyer's own vehicle. For a new car, buyers may therefore consider comprehensive motor insurance depending on their vehicle, usage and risk exposure. The cheapest premium may not necessarily provide the most suitable cover.

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"IDV, deductibles, exclusions, claim support and the availability of cashless garages can have a much greater bearing on the experience when a claim actually arises," Bansal told NDTV.

2. Add-Ons Can Quietly Increase The Insurance Bill

A buyer may be offered several insurance add-ons while purchasing a new car. Zero depreciation, return-to-invoice, engine protection, roadside assistance and consumables cover are some examples. The problem is that buyers can fall into either of two traps. They may accept every add-on without understanding its purpose. Or they may reject everything simply to bring down the premium.

Neither approach is necessarily suitable for every buyer. The relevance of an add-on depends on factors such as the vehicle's value, where it is driven, parking conditions and how frequently it is used. The objective should be to select protection based on actual risks rather than buying the maximum number of add-ons.

3. Accessories Can Make The Final Bill Bigger

Accessories are another area where the final cost can move well beyond the price buyers initially had in mind. Floor mats, seat covers, infotainment upgrades, dash cameras and other accessories can quickly add to the bill. Some buyers may also feel that accessories offered at the dealership are part of the purchase itself. They are not.

"Buyers should ask for an itemised list and check whether each accessory is necessary. It is also worth comparing prices outside the dealership before agreeing to a package,"  Abhishek Bhilwaria, Partner at BhilwariaFinserv, told NDTV.

4. Warranty Does Not Mean Everything Is Covered

A common mistake among first-time car owners is confusing a vehicle warranty with motor insurance. They serve different purposes. A warranty generally covers specified manufacturing or component-related defects, subject to its terms and conditions.

Motor insurance, on the other hand, is designed to cover specified risks such as accidents, theft, natural calamities and third-party liabilities. Routine maintenance, wear and tear and several mechanical problems may not be covered by a standard motor insurance policy. Understanding this difference before buying the car can prevent an unpleasant surprise when a repair bill arrives.

5. The Cheapest Insurance May Cost More Later

For a first-time buyer, the natural question is often: "How much does the insurance cost?"

But that may not be the right question. "Insurance should be evaluated as part of the car's overall ownership cost, not just as the cheapest premium available at the time of purchase," Bansal said.

A policy with a lower premium may have differences in IDV, deductibles, exclusions, claims support or network garage availability. These differences may matter much more when the owner actually needs to make a claim.

For a new car buyer, therefore, the final price should not be limited to the ex-showroom figure. Registration and road tax are unavoidable parts of the purchase. Insurance, accessories and other charges can further increase the amount payable.

The safest approach is to ask the dealer for a complete, itemised on-road price before making the payment. "And when it comes to insurance, the key question is not simply how much the policy costs. It is what financial risk the policy actually protects the buyer from," Bhilwaria added.